Breakout for Energy ETFs?Posted 10/16/2009 2:56 p.m. EDT Gasoline inventories declined by 5.2 million barrels last week, while analysts had expected an increase. Crude oil inventories increased by 0.4 million barrels, but it was overshadowed by the big decline in gasoline and a smaller decline in distillates, which includes heating oil. Refinery utilization is down for maintenance and that could mean a few more weeks of inventory declines. Nevertheless, gasoline inventory is 15.4 million barrels above 2008 levels at this time, distillates are 48.6 million barrels above last year's levels, and crude oil inventories are 29.6 million barrels higher. Equity investors followed the pop in oil yesterday by pushing up the price of energy ETFs. Energy Select SPDR ( XLE - Get Report) gained 2% to close at its highest level since October 2008. Shares of refiner Tesoro ( TSO) gained 8.6%, and Valero ( VLO - Get Report) advanced 7.1%. iShares Dow Jones U.S. Oil & Gas Exploration & Production ( IEO - Get Report) is the ETF with the largest exposure to TSO at 0.83%; it gained 1.9% yesterday. IEO also has the largest exposure to VLO, at 3.02%. We've seen natural gas, crude oil and now gasoline jump and plunge based on large, unexpected swings in inventories. It is partially due to economic data that provides a mixed picture of the economy, along with huge amounts of liquidity created by the Federal Reserve.
Boon for Europe, Korea ETFsPosted 10/15/2009 12:43 p.m. EDT The trade agreement struck this week between South Korea and the European Union is of major significance and could have positive implications for international exchange-traded funds that track the two economies. This week's agreement, which still needs the approval of lawmakers, would be the second-largest in history. Only the 1994 North American Free Trade Agreement among the U.S., Canada and Mexico is bigger. Funds to pay attention to include iShares MSCI South Korea Index Fund ( EWY - Get Report), iShares S&P Global Healthcare Sector Index ( IXJ - Get Report), PowerShares FTSE RAFI Europe Portfolio ( PEF) and Vanguard European ETF ( VGK - Get Report). The new deal between South Korea and the EU would get rid of tariffs and other protectionist barriers, making 99% of the trade between the two regions duty-free. According to this Bloomberg report, European companies from the health care, consumer and financial sectors are expected to benefit most. One group working to undermine the agreement is the European car manufacturers. The companies are wary of the competitive advantage South Korea would gain. South Korea also expects to gain from the agreement. According to South Korean analysts cited by Bloomberg, the pact is expected to boost the nation's GDP by more than 3% and increase employment by more than 3.5%.
Turkey and Armenia Establish RelationsPosted 10/12/2009 3:46 p.m. EDT One ETF I have followed closely in my blog is the iShares MSCI Turkey Investable Market Index ( TUR - Get Report). This fund, designed to follow a basket of companies that represent the broad Turkish market, has performed fantastically in 2009. In three months, the TUR has popped 41%. Year-to-date for the period ending Oct. 9, the fund is up over 99%.